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P corporation, an SME, paid P3,000,000 for a 90% interest in S Company on January 1, 2019. The stockholders of S Company included share capital of P2,000,000 and retained earnings of P1,000,000. Of the excess of total consideration (purchase price plus NCI) over book value, 60% is attributable to undervalued inventories and the remainder to goodwill. All inventories are sold in 2019. Also, on April 1, 2019, P sold an equipment to S for P300,000 (carrying value is P250,000 with remaining life of 5 years). S's net income for the year is P522,500. How much is the NCI at the end of 2019? *
Expert Solution
361,333.33
Step-by-step explanation
| Total | Parent | NCI | |
| Consideration | 3,333,333.33 | 3,000,000.00 | 333,333.33 |
| Book Value of the Net Assets | 3,000,000.00 | 2,700,000.00 | 300,000.00 |
| Excess | 333,333.33 | 300,000.00 | 33,333.33 |
| Inventory | (200,000.00) | (180,000.00) | (20,000.00) |
| Goodwill | 133,333.33 | 120,000.00 | 13,333.33 |
| NCI | |
| Net Income | 52,250.00 |
| Amortization | (20,000.00) |
| Unrealized Gain - Upstream | (5,000.00) |
| Realized Gain - Upstream | 750.00 |
| Net Income | 28,000.00 |
| NCI, beg | 333,333.33 |
| NCI, Dividend | - |
| NCI, Net Income | 28,000.00 |
| NCI, End | 361,333.33 |
Note: Read the PRFS 10 standard.
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